CLC 056 ACTUAL EXAM 2025/ 2026
QUESTIONS WITH VERIFIED ANSWERS
A high proportion of manual labor - It is more difficult to reduce the labor input when there is
limited labor effort, the labor effort is machine paced, or individual line workers only touch the
product for a few seconds.
Uninterrupted production - As more and more units are produced, labor hour requirements
decline. If workers, tooling, or other elements are lost during breaks in production, some
improvement will also be lost.
Here are a few more situations in which improvement curve application would be beneficial:
Production of complex items - The more complex the item, the more opportunity there is to
improve.
No major technological change - If there are major changes in technology, the benefit of
previous improvement may be lost.
Continuous pressure to improve - The management of the firm must exert continuous pressure
to improve and be invested in the people and equipment needed to obtain improvement. -
correct answer -Take a look at the data in the table below. To illustrate the effect of the unit
curve, assume that the first unit required 100,000 labor-hours to produce.If the slope of the
curve is 80%, the table demonstrates the labor-hours required to produce units at successively
doubled quantities.
The amount of labor-hour reduction between doubled quantities is not constant, but is
constantly declining. The rate of decline, however, remains constant (20%).
,Graphing the unit improvement curve demonstrates the relationship between the total units
produced and unit cost.
A labor-hour graph of this data drawn on ordinary graph paper becomes a curve as shown in the
graph to the right.
The graph is a curve because the number of labor-hour reduction between doubled quantities is
constantly declining and an increasing number of units are required to double the quantity
produced.
Note that most of the improvement takes place during the early units of production. - correct
answer -When a major technological change occurs, the existing learning curve may no longer
be valid and the negotiator should consider negotiating a new curve with a new first unit value
and slope. You already know that if there is a major technological change, the learning enjoyed
on the current product would no longer be a valid percentage to apply to future production lots.
ou can calculate the slope of a curve, by dividing the unit cost into the unit cost at twice the
quantity then multiplying the resulting ratio by 100. 1600/2000 = .80 * 100 = 80% - correct
answer -We know the slope is 80% and it took 5,000 labor hours to produce the 10th unit, so
we multiply 5,000 by .8 to get the labor hours needed for the 20th unit. We now know that it
took 4,000 labor hours to produce the 20th unit. To find the labor hours needed to produce the
40th unit, multiply 4,000 by .8 to get the answer - 3,200 labor hours.
In order to estimate the cost of a lot that has not yet been produced, you must enter your data
into the Estimates section of the improvement curve spreadsheet tool. You can always
determine the first unit of a lot by adding 1 unit to the previous lot's last unit - correct answer -
As contractors consider investment opportunities, they consider the capital required to make
each investment and the potential return on that investment.
,In general, the prospective return on an investment must be higher than the cost of capital
required to make the investment. The challenge is, the cost of capital is not the same for all
sources. For instance, it may cost more to get a long-term loan than it does to get owner's
equity.
The cost of capital is a real cost that affects investment decisions. That is why it is important to
improve contractor cost measurement by providing for allocation of the cost of contractor
investment in facilities to negotiated contracts.
Do not confuse FCCOM with accrued interest; it is an imputed cost of facilities capital. The
Federal Acquisition Regulation (FAR) requires that you exclude any facilities cost of capital
included in cost objectives before applying profit or fee factors.
To apply FCCOM, the contractor's capital investment must be measured, allocated to contracts,
and costed in accordance with Cost Accounting Standard (CAS) 414. This applies whether the
contract is covered by CAS or not. If a contract is not covered by CAS, but the contractor
proposes COM, follow the procedures in FAR 31.205-10, Cost of Money.
If the contractor fails to identify or propose FCCOM in a proposal for a contract that will be
subject to the FAR cost principles for contracts with commercial organizations, FCCOM will not
be an allowable cost. - correct answer -IAW FAR 15.408(i), if the contractor does not propose
FCCOM, the contracting officer is required to insert the clause at FAR 52.215-17 into the
resultant contract and any FCCOM is considered an unallowable cost
The contractor did not propose FCCOM in the original contract. When that happens, a clause is
inserted in the resultant contract. It should be noted that any FCCOM in proposals or incurred
cost submissions, thereafter, becomes an unallowable cost. The value you would enter in the
Government Objective spreadsheet (E23) for FCCOM is $0 - correct answer -As a contract
specialist, you will have to analyze contract proposals to determine a profit amount based on
, the contract type, contract risk, and other factors. Profit/fee is the dollar amount over and
above allowable costs that is paid to the firm for contract performance.
There are several factors that form the basis for agency structured approaches to profit/fee
analysis. These factors must be considered in your analysis unless they are clearly inappropriate
or not applicable.
Some of these factors are:
Contractor effort Material acquisition
Conversion direct labor
Conversion-related indirect costs
General management
Cost risk
Federal socioeconomic programs
Capital investments
Cost control and other past accomplishments
Independent development
Additional factors - correct answer -Determining a prenegotiation objective requires a
structured approach. Structured approaches provide a discipline for ensuring that all the
relevant factors are considered in a profit/fee analysis.
Any agency making noncompetitive contract awards over $100,000 and totaling more than $50
million a year shall use a structured approach when determining the profit or fee objective in
any acquisition that requires a cost analysis.
In situations where the use of a structured approach would be inappropriate, the agency may
prescribe specific exemptions.
QUESTIONS WITH VERIFIED ANSWERS
A high proportion of manual labor - It is more difficult to reduce the labor input when there is
limited labor effort, the labor effort is machine paced, or individual line workers only touch the
product for a few seconds.
Uninterrupted production - As more and more units are produced, labor hour requirements
decline. If workers, tooling, or other elements are lost during breaks in production, some
improvement will also be lost.
Here are a few more situations in which improvement curve application would be beneficial:
Production of complex items - The more complex the item, the more opportunity there is to
improve.
No major technological change - If there are major changes in technology, the benefit of
previous improvement may be lost.
Continuous pressure to improve - The management of the firm must exert continuous pressure
to improve and be invested in the people and equipment needed to obtain improvement. -
correct answer -Take a look at the data in the table below. To illustrate the effect of the unit
curve, assume that the first unit required 100,000 labor-hours to produce.If the slope of the
curve is 80%, the table demonstrates the labor-hours required to produce units at successively
doubled quantities.
The amount of labor-hour reduction between doubled quantities is not constant, but is
constantly declining. The rate of decline, however, remains constant (20%).
,Graphing the unit improvement curve demonstrates the relationship between the total units
produced and unit cost.
A labor-hour graph of this data drawn on ordinary graph paper becomes a curve as shown in the
graph to the right.
The graph is a curve because the number of labor-hour reduction between doubled quantities is
constantly declining and an increasing number of units are required to double the quantity
produced.
Note that most of the improvement takes place during the early units of production. - correct
answer -When a major technological change occurs, the existing learning curve may no longer
be valid and the negotiator should consider negotiating a new curve with a new first unit value
and slope. You already know that if there is a major technological change, the learning enjoyed
on the current product would no longer be a valid percentage to apply to future production lots.
ou can calculate the slope of a curve, by dividing the unit cost into the unit cost at twice the
quantity then multiplying the resulting ratio by 100. 1600/2000 = .80 * 100 = 80% - correct
answer -We know the slope is 80% and it took 5,000 labor hours to produce the 10th unit, so
we multiply 5,000 by .8 to get the labor hours needed for the 20th unit. We now know that it
took 4,000 labor hours to produce the 20th unit. To find the labor hours needed to produce the
40th unit, multiply 4,000 by .8 to get the answer - 3,200 labor hours.
In order to estimate the cost of a lot that has not yet been produced, you must enter your data
into the Estimates section of the improvement curve spreadsheet tool. You can always
determine the first unit of a lot by adding 1 unit to the previous lot's last unit - correct answer -
As contractors consider investment opportunities, they consider the capital required to make
each investment and the potential return on that investment.
,In general, the prospective return on an investment must be higher than the cost of capital
required to make the investment. The challenge is, the cost of capital is not the same for all
sources. For instance, it may cost more to get a long-term loan than it does to get owner's
equity.
The cost of capital is a real cost that affects investment decisions. That is why it is important to
improve contractor cost measurement by providing for allocation of the cost of contractor
investment in facilities to negotiated contracts.
Do not confuse FCCOM with accrued interest; it is an imputed cost of facilities capital. The
Federal Acquisition Regulation (FAR) requires that you exclude any facilities cost of capital
included in cost objectives before applying profit or fee factors.
To apply FCCOM, the contractor's capital investment must be measured, allocated to contracts,
and costed in accordance with Cost Accounting Standard (CAS) 414. This applies whether the
contract is covered by CAS or not. If a contract is not covered by CAS, but the contractor
proposes COM, follow the procedures in FAR 31.205-10, Cost of Money.
If the contractor fails to identify or propose FCCOM in a proposal for a contract that will be
subject to the FAR cost principles for contracts with commercial organizations, FCCOM will not
be an allowable cost. - correct answer -IAW FAR 15.408(i), if the contractor does not propose
FCCOM, the contracting officer is required to insert the clause at FAR 52.215-17 into the
resultant contract and any FCCOM is considered an unallowable cost
The contractor did not propose FCCOM in the original contract. When that happens, a clause is
inserted in the resultant contract. It should be noted that any FCCOM in proposals or incurred
cost submissions, thereafter, becomes an unallowable cost. The value you would enter in the
Government Objective spreadsheet (E23) for FCCOM is $0 - correct answer -As a contract
specialist, you will have to analyze contract proposals to determine a profit amount based on
, the contract type, contract risk, and other factors. Profit/fee is the dollar amount over and
above allowable costs that is paid to the firm for contract performance.
There are several factors that form the basis for agency structured approaches to profit/fee
analysis. These factors must be considered in your analysis unless they are clearly inappropriate
or not applicable.
Some of these factors are:
Contractor effort Material acquisition
Conversion direct labor
Conversion-related indirect costs
General management
Cost risk
Federal socioeconomic programs
Capital investments
Cost control and other past accomplishments
Independent development
Additional factors - correct answer -Determining a prenegotiation objective requires a
structured approach. Structured approaches provide a discipline for ensuring that all the
relevant factors are considered in a profit/fee analysis.
Any agency making noncompetitive contract awards over $100,000 and totaling more than $50
million a year shall use a structured approach when determining the profit or fee objective in
any acquisition that requires a cost analysis.
In situations where the use of a structured approach would be inappropriate, the agency may
prescribe specific exemptions.
